Much of that growth is being fueled by China, which is poised to overtake Japan as the second largest consumer of luxury goods on the planet.

According to the report, China (including Hong Kong, Macao, and Taiwan) will see 25% year-over-year growth in 2011, while sales in Japan are expected to decline by 5%, due in part to structural decline and the impact of the recent earthquake.

Bain also predicts that growth in emerging markets will fuel luxury manufacturers over the next two to three years.

The luxury market in Russia is poised to grow between 5% and 10% annually, while new store openings will fuel growth in the Middle East, and Brazil will see heavy investments by international brands, the report says.